On April 1, Cresco Labs, a publicly traded cannabis company based in Chicago,\u00a0announced\u00a0an all-stock purchase of Origin House, a California-based \u201cproducts and brands company\u201d in the same space.\u00a0<\/p>\n
If stock prices stay steady when shareholders of both companies vote on the deal \u2014 and if shareholders approve it \u2014 the\u00a0acquisition<\/a> is valued at roughly $1.1 billion in Canadian dollars, around $826 million U.S. Which is to say this takeover would then have the honor of the biggest-ever transaction in the cannabis industry, supplanting troubled MedMen\u2019s $682 million all-stock takeover of PharmaCann<\/a>.<\/p>\n If this is the first time you\u2019ve heard of either Origin House or Cresco Labs, you are not alone. Both companies are relatively new \u2014 and new even by the very fresh and fast standards of the cannabis space. So what does the deal mean, aside from many numbers and a splashy press release, handy for drumming up interest among investors?<\/p>\n To use a tired and imperfect but good enough analogy, the purchased entity Origin House is a sort of liquor distribution company. Origin House has five distribution and manufacturing licenses in California, where it\u00a0claims<\/a>\u00a0to deliver \u201cover 130 branded cannabis products to the majority of licensed dispensaries.\u201d Alternately called a \u201cbrand house\u201d or a \u201cbrand accelerator,\u201d the company is clearly banking on consumers\u2019 penchant for recognizable products. Origin House is headquartered in Ottawa, Canada \u2014 where it trades under the name CannaRoyalty \u2014 and trades on markets in both Canada and in the United States. Brands you might know that Origin House\u00a0distributes<\/a>\u00a0include Bhang Chocolates;\u00a0Tommy Chong\u2019s<\/a>\u00a0branded cannabis, Chong\u2019s Choice;\u00a0D\u00e9fonc\u00e9 Chocolatier<\/a>, and Kurvana oil cartridges.<\/p>\n On the buyer\u2019s side, the company\u2019s Illinois home base is a good place for a young and ambitious cannabis company with a decent amount of runway. The state is heavily populated, new Gov. J.B. Pritzker says he wants to legalize recreational marijuana \u2014 though as the example of New Jersey demonstrates, governors make such bold promises at their peril \u2014 and entry into the market there is still restricted, meaning licensed companies get a bigger piece of the pie. The state caps the number of cultivation and retail licenses, and Cresco already has<\/a>\u00a0a couple there as well as in Ohio, Pennsylvania, Florida, Arizona, Nevada and California.<\/p>\n It\u2019s a stock deal. No cash will exchange hands. Cresco will swap 0.8428 of its shares for each Origin House share. Origin House shareholders will become Cresco shareholders, then the two companies will become one.\u00a0<\/p>\n Since cash is best used for things like paying states tens or hundreds of thousands of dollars for distribution licenses, which then may pay off down the road many times more, stakes in companies are an attractive alternative.<\/p>\n Cresco has major national ambitions and, if the deal goes through, a major national presence. In fact, it\u2019s possibly one of the largest cannabis bodies in the United States, with 51 retail licenses and 1.5 million square feet under cultivation in 11 states, as Cresco CEO Charlie Bachtell\u00a0said<\/a>\u00a0in a press release.\u00a0<\/p>\n But Origin House shareholders must approve the deal, which would close by the end of June and not every shareholder is thrilled. Jerome Hass, a portfolio manager at investment firm Lightwater Partners,\u00a0appeared on<\/a>\u00a0Bloomberg Canada to share why he was \u201cunderwhelmed\u201d and plans to vote against the deal.\u00a0<\/p>\n Essentially, he said, it\u2019s a stock-market play aimed at boosting prices in both companies\u2019 stock \u2014 and if you are trying to build a company long term, profit longevity should take priority instead. On top of that, he added that American investors aren\u2019t excited about investing in either the Canadian exchanges or the OTC sheets, where both companies trade. OTC stocks\u2019 statements are not audited by the Securities and Exchange Commission, like stocks on NYSE or NASDAQ.<\/p>\n Therein lies the risk in dealing with companies in early or middle stages who are already publicly traded, and the risk in getting too excited about this deal \u2014 which isn\u2019t even final. But it sure does make for a catchy headline.<\/p>\n TELL US<\/strong>, do you have any stock in the Canadian market?<\/p>\n The post Billion-Dollar Cannabis? Inside the Marijuana Industry\u2019s Biggest Deal to Date<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
On April 1, Cresco Labs, a publicly traded cannabis company based in Chicago,\u00a0announced\u00a0an all-stock purchase of Origin House, a California-based \u201cproducts and brands company\u201d in the same space.\u00a0 If stock prices stay steady when shareholders of both companies vote on the deal \u2014 and if shareholders approve it \u2014 the\u00a0acquisitionContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,538,170,1051,687,4552,6223],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/34353"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=34353"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/34353\/revisions"}],"predecessor-version":[{"id":34354,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/34353\/revisions\/34354"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=34353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=34353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=34353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Meet the Players<\/h4>\n
So, What\u2019s the Deal, and What Does it Mean?<\/h4>\n
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\nRead More: Billion-Dollar Cannabis? Inside the Marijuana Industry\u2019s Biggest Deal to Date<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"